If trade court ruling stands, Trump seen shifting to other options for tariff assault

By David Lawder

President Donald Trump's global tariff assault may be slowed but won't be stopped by court rulings that may ultimately force a shift to other legal authorities for his campaign to pressure countries into trade concessions, trade and legal experts say.

Their advice to foreign governments, companies and other clients: Assume that Trump will not give up on his tariffs and that they will resume in one form or another.

For now, an emergency stay of the Court of International Trade's ruling against Trump's tariffs under the International Emergency Economic Powers Act will keep them in place for the time being, maintaining leverage over trading partners.

"This is just the opening salvo," said Dan Ujczo a lawyer and U.S.-Canada trade expert at Thompson Hine in Columbus, Ohio. "The Trump administration has a number of options including reframing the executive orders to include some of the boundaries used in the CIT opinion."

The Manhattan-based trade court ruled late on Wednesday that Trump overstepped his legal authority in imposing punitive tariffs under IEEPA, a 1977 law that has primarily been used for sanctions.

IEEPA's main advantage was its speed and seemingly broad scope, which suited Trump's desire to move quickly to impose tariffs within weeks of his January 20 inauguration through the use of executive orders.

This avoided lengthy trade investigations and public comment periods under more traditional authorities for imposing tariffs through executive action, including the Section 301 unfair trade practices statute used to impose tariffs on Chinese imports in 2018 and 2019 and the Section 232 national security statute used for steel, aluminum and autos tariffs.

White House trade adviser Peter Navarro told reporters that if IEEPA ultimately becomes unavailable, the administration could invoke tariffs under either of the 232 or 301 authorities, as well as two other never-used trade authorities, including Section 338 of the Tariff Act of 1930 and Section 122 of the Trade Act of 1974.

"So you can assume that even if we lose, we will do it another way," Navarro said.

'CAREFUL WHAT YOU ASK FOR'

Section 122 allows Trump to impose a 15% tariff for 150 days to restrict imports to address balance-of-payments problems or prevent significant depreciation of the dollar, but would require Congress to extend it after 150 days.

Ironically, the statute was enacted as a result of the President Richard M. Nixon's 1971 imposition of a global 10% tariff under IEEPA's predecessor law, the 1917 Trading With the Enemy Act. Legal experts had cited the Nixon tariffs as a potential parallel for using IEEPA to back Trump's tariffs.

"I think the big picture here is we've got a very strong case with IEEPA, but the court basically tells us, if we lose that, we just do some other things. So nothing's really changed," Navarro told Bloomberg TV.

Prior to announcing his April 2 global "Liberation Day" tariffs of 10-50%, some experts had anticipated that Trump would use the 85-year-old Section 338 to back them. The anti-trade discrimination statute has been threatened, but never invoked, and has largely disappeared from public records since the 1940s.

It would allow Trump to impose additional tariffs of 15% up to 50% on goods from any country that discriminates against U.S. products in a way that puts American goods at a "disadvantage" compared to imports from other countries.

Ujczo said Trump could also go back to Congress for more tariff authorities. These could make the tariffs more legally durable.

"For folks celebrating this opinion, this may be a case of be careful what you ask for," he said.

Kelly Ann Shaw, a former trade adviser to Trump in his first term and partner at the Akin Gump law firm in Washington, said Trump "is not going to just give up on his tariff strategy" regardless of the CIT and other IEEPA case outcomes.

"I think there's plenty of other authority that the administration could use to justify very similar, or, if not the same, measures," Shaw said. "And so when I'm talking to companies, clients and governments, I think the safest thing to assume is that these tariffs will still continue to exist in some form, if not the identical one."